Artisanal Spirits (LSE:ART) — Half Year Results

0:01 Good afternoon, and welcome to the ARTISANAL SPIRITS COMPANY PLC Half Year Results Investor Presentation. Throughout this recorded meeting, investors will be in listen only mode. Questions are encouraged and can be submitted at any time via that Q and A tab situated in the right hand corner of your screen. Just click Q and A, type in your question and press send. The company may not be in a position to answer every question received during the meeting itself. However, the company can review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, we'd like to submit the following poll. I'd now like to hand you over to Andrew Dane, CEO. Good afternoon, sir.

0:31 Afternoon, Paul. Thanks very much, and afternoon. Thanks all for those of you joining the webinar. A chance to present our results for the first half of twenty twenty four. So I'll start with some introductions, myself, I'm Andrew Dems, chief exec, joined here by my colleague, Billy McArthur, CFO. If we talk about the headlines, there are five key messages to to cover. The first is around the improvement in profitability, which has continued with a million pound increase in EBITDA versus the prior year, which I think is a pretty creditable performance based on relatively flat revenue in what are more challenging market conditions, and that reflects membership growth of about 4% versus last year, two percentage point improvement in gross margin and recurring cost efficiencies across A and P payroll overheads, which we'll talk about later.

1:21 That flat revenue was supported by further revenue diversification, and that's both geographical diversification with the addition of the Taiwan and Korea markets helping to offset some of the downturn in China, alongside corporate diversification with the acquisition of Single Cast Nation and growth in cask sales. The next point is the key around the significant asset value of the business, and we'll spend some time referring back to the update we provided in July where we had an independent third party cask valuation exercise undertaken which valued our assets at just over a £100,000,000 representing around four times net book value and four times net debt levels. Following on from that, the improvement in our cash profile and following that significant investment, which has delivered that upside, we're now at a point where net debt has peaked and the business is starting to generate positive cash cash movements.

2:18 And finally, underpinning it all is the outstanding quality, which is being recognized both in terms of individual releases but also for the brands across the range. So those are the headlines. We'll talk to them in detail. But first of all, brief overview back of the business. At our heart, we're about captivating a global community of whisky adventurers, and we do that by creating and selling outstanding limited edition whisky and experiences around the world. But overall, our ambition is to create high quality, highly profitable and cash generative premium global spirits business. Underpinning that are our five strategic pillars: gross whisky, membership, experiences, new brands and audiences and people, and our strategic initiatives line up under those pillars to deliver on our ambition.

3:07 When we look at our brands, we have the Scotch Malt Whiskey Society, which we will talk about mostly Single Cast Nation, which was acquired in January of this year and JG Thomson, focused on small batch blended malt whiskeys. But at the heart of the business is the Scotch Malt Whiskey Society. Founded in 1983, it's a global premium direct to consumer ecommerce business, selling outstanding limited edition whiskeys to a global fee paying membership. Business model works by procuring outstanding whiskies from a wide range of distilleries, over 150 distilleries released to date and as I'll mention later, two brand new Scotch whisky distilleries to be released later this year. We own over 18,000 casks worth over that £100,000,000, maturing those casks and bottling them at our own facility called Masterton Bond, funded using IPO proceeds and fully operational. We sell those under the SMWS brand exclusively to members. But it's about more than just a great bottle shop, as I've said before. It's about the experience that goes with that. Four members rooms in The UK and a global presence

4:17 where we bring that experience to life across all markets. So I'll now hand over to Billy, pick up some of the headlines on the h one results for 2024. Thank you, Andrew. So Andrew's given a an introduction there and what we call out is it has been a the whiskey industry is challenging currently, but we we find we find that we've achieved a credible performance in terms of revenue, so roughly flat year on year, slight claim. But in the main, it's flat revenue. What we're key to call out is that improvement in profit. So on this slide, you'll see the improvement in gross profit. So from 6,200,000 to 6,400,000 if we compare it to the prior half, which is which ultimately results in a plus two percentage points movement plus 3% on actual absolute movement.

5:07 And then what happens is that feeds down to contribution where we see growth and profitability there. And then as we go on the slides, you'll see that actually the cost savings and management and efficiencies that we've achieved in the first half versus the second half has meant that we have seen a significant improvement in profitability. So we'll come into that shortly. In terms of our membership, again, year on year, we've seen improvement, slight improvement at 4%, and that is slightly down in the year end figure. However, what we would say is we're seeing a more engaged member within the business now. Now we've taken significant steps to make sure that essentially our members are actually tasting our liquid. They're getting the benefits of tasting this outstanding whiskeys that we have within this business. And some of the things that help and drive that, for example, is a membership in a bottle and a renewal of on a bottle.

6:00 So much so that many more members are actually choosing to take a membership or take a renewal with the liquid. What that does is that gives you longer term engagement as they then take the liquid to the lips and then look to buy for the bottles as a result. Now supporting that is still strong membership retention, over 70%, that's slightly down. And again, that's through us trying to ensure that we're we're not just passing through discounted memberships as such. It's all about the the product and the membership in a bottle and the new one in a bottle. So one thing I'd say on that, and if we look at lifetime value at the bottom, we've seen a lot of the decline members has come in The UK. But where that's declined around 7%, the annual revenue per member has increased eight to 9%. So it's far offsetting that. So we've seen that happen over half one, and we expect that to further build as we go on and we start to see that more engagement that are coming through.

6:53 From a cask spirit perspective, again, we'll talk a little bit more, but, Key, we've we've continued to build a cask inventory now sitting over 18,000 casks. That cask inventory has a net book value of £26,500,000. And again, we'll talk a bit more, but we've we've carried out an independent valuation. So a more direct valuation based on two sector experts taking our cask holding at the end of June. And notably, they they measure the value of that at £102,000,000. So that's four times the current net book value. And we'll talk about a a little bit more about that shortly and how that compares to a market cap and evaluation of the business. In the meantime, we talked about revenue. I think the key thing for this business is the increased diversification.

7:40 So where we've seen the new strategic markets of Korea and Taiwan deliver h one and h one performance against what didn't exist at h one last year given they came in a half two. We've seen an increase in cash sales of about £500,000 year on year, and we will continue to see that growth. And the introduction of single cast nation from the first of January, all this new delivery in the business, sustainable new delivery, has resulted in flat revenue. But what that has helped us do is manage to offset significant decline in China. So we have seen a 30% reduction in China, similar levels to last year. The market is in a tough place and that's largely driven by the local economy and the consumer sentiment. That's really tough out there right now. But what we are clear on is our ability to diversify our revenue and continue to mitigate risk. As I said, those new strategic markets are sustainable recurring markets that will manage risk. And more importantly, when we see signs of recovery in that and what we would regard as a cyclical nature of the market right now, we will see the China growth on top of that as well. I think the other key point to know is America's, as I've mentioned, SCN, we've seen flat depletions year on year, which when compared again with the market, some of the bigger players you have seen decline in US. So we we see it as a resilient performance that we can make that can manage us going forward as well and allow us to grow further.

9:02 From a p and l perspective, we've mentioned that gross profit improvement and the feed through to contribution. I think it's important to highlight that £1,000,000 improvement on EBITDA year on year is in supported significantly by around 700 of cost efficiencies within the business. Now all that, around 400 relates to marketing. So as you can see, we've essentially deferred flat flat revenue on similar on on sorry, a lower marketing spend, 23% reduction. Now that's us ensuring we invest in the right places to recruit new members and and to ensure we retain that more engaged member. And and that's pure marketing spend. That's also supported by things like membership in a bottle and renewal in a bottle. With regards to overheads, we made some significant investments in the past past years, particularly f y twenty three. So we we invested in our tech roadmap, a new app. We invested in single cast nation and acquisition, and we're still looking at further further opportunities within The US market. The key thing there is those were spends that have essentially delivered something in f y twenty three that we can now build on. Those spends will not recur. And alongside key management of costs like professional fees, travel, These are sustainable recurring benefits that will continue throughout the business.

10:27 From a cash flow perspective and a balance sheet perspective, it is important to note that we do still hold a strong net asset position of £15,200,000, and within that facility headroom of £9,000,000 at the end of June. Now from a cash flow perspective, if you look at the numbers on the right hand side, you'll see particularly in the net cash spirit spend and capital expenditure, those are significantly down in prior years. Now that's the the spirit spend being we have invested in cash spirit since IPO. We've the strategy has been to build up the CASSPIRIT base now sitting over 18,000 to ensure we can meet future demand. We're at the point where we can meet future demand into the next decade. So as a result, there is more of a requirement to invest on a replenishment basis rather than a build stock basis. So what will happen going forward is what you can see in f y twenty four will start to will also begin to exist in the sense that that cash spirit spend has peaked.

11:26 From a CapEx perspective as well, that goes to show in prior years invested in our vaults, we've invested in our technology, we've invested in a lot of wood. Like the SPIRIT, we the the the wood spend has peaked and will come down a little. And the the outlook doesn't call for huge amounts of CapEx in terms of tech roadmap because we build that in in prior years and in venues. So what I would say is we are a business moving much more to self sufficient cash. We've said that we're currently viewing our net debt as as at its peak. We will be more self sufficient. We will start to the other key spend in there is interest payments. We'll be able to cover those with more of our own cash conversion, and that's a commitment we're looking to make. And you can see that starting to come through in the f twenty four half one numbers.

12:15 So briefly spoke about the independent cash SPIRIT valuation. Again, two sector experts carried that out for us, and I think it's really important to note that that's four times net book value. It's sorry, almost four times net book value. It's almost four times net debt. Now, as I've said, we will look to be more self sufficient and and and look to reduce that net debt a little bit, but we still believe that net debt level against the cash that we hold is within our strategy. We're just not looking to increase it and become a little more self sufficient. I think the other key points in here that isn't in the slide, we have a current market cap that's £30,000,000, but an independent cast value of £102,000,000. So there's significant inherent value within this business that independent cast value is more directly calling out.

13:05 Yeah. And I think if we pick on that point about the cast value and we call back to this business generates value in two stages. The first stage of that value is by buying casks, maturing them, capturing their appreciation, and that stage has been successful. We spent roughly 25,000,000, it's now worth a 100,000,000. So that first part of the investment strategy has been very successful, but the long term value comes from taking those tasks, putting them into bottles and selling that outstanding liquid to our members and to our customers around the world. Of course, the short term, we might realize some of the value from those casks, but the long term value comes from turning most of those casks into bottles and delivering them to members, whether one bottle at a time or whole cask at a time, turning them into bottles and selling them to members, and that's where the long term value comes. And that means turning those 25,000,000 of book value, not into just a 100 but into £500,000,000 worth of bottles which is what that current inventory is worth in bottle.

14:11 Now key to underpin that is the loyal growing global membership, and we've talked before about lifetime value not being a directional metric but rather being an indicator of the highly engaged members combining with high margin model. Overall, our objective is to drive up total contribution, total profitability of the business and we do that by recruiting more members, retaining those members, engaging those members, and driving up margins and driving down costs. And obviously, disappointed to see that number having come down a little, however, it's still a very substantial number. It speaks to the quality and level of engagement of those members remaining very high, almost a thousand pounds of lifetime profit per member.

15:00 Now we think about our model, quality underpins everything that we do. And don't worry, I'm not going to talk to every individual award, but it's more to capture the fact that across the group, we are winning huge numbers of awards, a record breaking awards year, not just in individual bottles and individual releases, which reflects the quality of the liquid that we bought, reflects the quality of the woods that we have invested in, reflects the quality of liquid and the the work of the whiskey team and all those across the business. But also more generally, the whole business is being recognized with master awards like the Icons of Whiskey Award, the New York International Spirits Competition the San Francisco World SPIRITS COMPANY PLC, some of the biggest wine and spirits competitions in the world being recognized with the top accolades.

15:49 Now as I talked about with the lifetime value, when we think about how we're marketing, there's really three pillars to how we do that. Recruit, retain, engage. Focusing on new ways to recruit, as Billy talked about, membership in a bottle, making sure we get liquid to lips as early as possible in a new member's journey. Retaining those members by making sure they're engaged, by improving the quality of comms, by onboarding them fully, and engaging them both in the digital and physical world. And that's, you know, the results of our investment in the vaults with 22,000 visits to our venue down in Leith since it was refurbished last September, as well as novel approaches like last week, we took the vaults on the road on an SMWS roadshow around Germany where over the space of six events, I think five nights, we had 250 members in Germany, that's almost a third of all the members in Germany, come to a tasting of some kind.

16:44 Tickets, auto sales, etcetera, generating substantial return and lots of engagement and interest in that market, so always looking at new ways to do so. If we now put that into context of the global opportunity, it continues to be significant and growing addressable market.

17:03 On this chart, the bars represent the total size of the global ultra premium Scotch malt whisky market and as a reminder, ultra premium price points in The UK are about £45 a bottle upwards. And what it shows is that globally that market continued to grow in 2023. However, there are a few nuances within that and the first is shown by that line on the page, which shows the return of duty free in particular driven by global travel retail. So 60% of the growth in the market last year was in that global travel retail and duty free space, a space that isn't necessarily right for the Scottish and the Whiskey Society, though opportunities like this, but it does represent opportunities for the broader group across J. J. Thompson, Single Cast Nation, etcetera.

17:53 But also as you then dive into the individual markets, the way I realize there's a lot of numbers on the page, The headlines really are that in our key markets, US, China, UK, Europe, actually, there was about a 1% decline year on year into 2023. In the smaller markets that we're in or the markets where we are smaller, those grew at 10% but the relative impact was lower, hence the comment about flat revenue being a creditable performance in the conditions. What it does do is it opens up new opportunities and particularly if you look at the non ASC markets, those in purple, there's a couple that jump out on the page, Nigeria and Vietnam. Now in the short term, Vietnam would be a more logical first step given our successes of new markets in Southeast Asia, but also Nigeria is on the list as a longer term target market.

18:51 If we then look ahead to what do people see happening in the industry, I think 2024 may continue to be challenging into 2025, but then return to growth across the markets and whether that happens in the early or later part of 2025 or into 2026 will vary across the markets. IWSR's view is that there will be $30,000,000,000 of incremental total beverage alcohol sales by 2028, two thirds of which to come from The US, China and India. And I would rank them in that order from our perspective, where the biggest opportunity is in The US, particularly in the short term, but it's a space we want to continue to invest in, get involved in direct control and operations and and ensure that we have the right setup there with acquisitions like Single Cast Nation fitting really well with our ambition in that space.

19:38 China, I think, will continue to be challenging over the period but does represent an upside opportunity if the market were to return. From an India perspective, it's a market that's on our list but the importation taxes, the levy of 150% means it's unlikely that we will make material contributions from that market in the short or medium term. So in summary, profit improvement continues with that 1,000,000 improvement in the first half of the year, meaning we've actually already delivered GBP 1,000,000 of EBITDA in the twelve months to June. That is in line with the full year consensus, so we just need to lap last year's H2 profitability to deliver the full year forecast. Supported by that revenue diversification, both geographical and corporate, the growth in that significant asset value that underpins the business, there's a huge asset value as Billy said, a multiple of debt, market cap, net book value, any other useful metric.

20:39 The improving cash profile with net debt having peaked and the business now being cash self sufficient underpinned by outstanding quality recognition. And specifically, if we look ahead to the kind of coming months and what to expect, further international expansion, two completely new Scotch malt whisky distilleries, which is always very exciting releases for SMWS. The first impact of the refresh of our range, including new releases such as the inaugural Creators Collection, which I think is going be wonderful, released later this year, as well as some new casts released into the members cast program, fiftieth anniversary program, which I think will really exciting, including some Ayla Pete, all giving us confidence and ability to deliver full year forecasts. So at that stage, I'll finish up the presentation, and I'll move on to the to the q and a.

21:30 Fantastic. I'll start by with no problem. Sorry, Andrew. I was gonna say I should say thank you very much indeed for your presentation. And as I say, questions wise, we have had a number of questions submitted, both pre submitted and throughout today's presentation. So if I can hand over to you just to click on that tab and where appropriate to do so, read out the questions and I'll pick up from you at the end. No problem at all. So what I'll do is I'll start with the questions that were pre submitted and then we can can work through. And the first one was around please, can you talk to the following specific overseas markets, the top three markets in Europe, China, and India? So I think starting with Europe, from a performance, revenue was relatively flat, consistent with the business. The EU market achieved 14% membership growth. In The UK, an improvement in the average revenue per member, which was up 8%, helped to mitigate the 7% decline in membership and particularly that happened in the first quarter of this year as we removed any discounting on particularly on renewals. We found there was a large number of members who were basically only taking advantage of very discounted kind of renewal offers, but instead focusing on those members who are engaged has helped to drive up spend per member as well as things like investment in the venues and those 22,000 people who've now been to the vault since its refurbishment.

22:51 In China, China is definitely the most challenging market we faced with sales down by 30% and well off their peak of 2022. Although membership was actually up with low double digit growth in membership of a relatively small base, I think in China what we're seeing is a bifurcation, so growth in sales of bottles between 50 and £100, which is something we've seen in all markets. So in all markets, we're continuing to invest in that space, making sure there's more releases, more price points that are competitive in that and often while still maintaining the quality. But also at the top end, we are relatively small, so investment in recruitment events to add a relatively small number of additional high net worth individuals.

23:39 And then finally, as I mentioned on India, it does represent an opportunity for growth in the long term, but in the short term, the 150% tariffs make it too economically challenging for us. So that's the first one. The second one, and there's actually two questions which I'll put together here, when are share prices likely to increase as they currently stand at a third of the value since IPO? The second is how come the shares are worth almost a third of that at the opening launch price? As a shareholder and as a CEO, I'm, of course, really deeply disappointed that the share price has fallen 60% since IPO and have continued to invest throughout. A key driver of that has been AIM market conditions since IPO with the entirety of the AIM market down an average of 40% since the date of our IPO and the average for retail customer retail companies who sell to direct consumers on AIM down by well over 80% since the date of our IPO.

24:42 However, partly it's also a reflection of our performance in 2023 where we did miss our numbers and we have to acknowledge and act on that. I mean, since our IPO, we have grown membership and revenue by around 60%. We've invested hugely in CASK SPIRIT and with the recent valuation, it shows that that strategy has been very successful with a $25,000,000 of total investment now worth a $100,000,000 However, we failed to deliver last year's profit forecast and it did impact the share price. So we doubled down on our commitment to delivery of this year's results and hence the ability to improve profitability in the first half even when revenue is flat and that's the bits we can control. The next question I'm not sure if it's a real question or a sort of AI copy and paste but it quotes simply Wall Street and a number of statistics in that, so what I'm going do is I'm going to pull out a few of the specific questions asked.

25:37 So first one is it says only one in six analysts see a positive company forecast for the next one to three years. I'm not quite sure what that means. We only have one analyst providing full coverage. That's our nomad and broker, Pammul Liberum, and you can see their forecast for growth and for a path to profitability. The second is a concern that companies flagging risks including having less than one year of cash runway. We, of course, don't hold huge cash balances. It wouldn't make any sense to do so when we have a debt balance. We do, however, have £9,000,000 of headroom in our facility as Billy alluded to. Another risk or comment being made about lack of new directors with only one new director joining the last three years. I would note I only took over as chief exec last year and Billy took on the role of CFO last year.

26:34 I would also say we have a really extremely high level of board to support Billy and I as the executive directors. We added three new directors on IPO with Mark Hunter, the former chief exec of Molson Coors Leslie Jackson, former CFO, William Grant and Stock Spirits and Helen Page, who is the Chief Brand Officer at Virgin Money and now serves on the Board of the Bank of Ireland. So they are really fantastic additions to the team. In line with the QCA code, we obviously continually review the board's effectiveness and discuss this at last week's board meeting as we continue to ensure we have the right board structure for the future. Next one again is about share price. Since the current CEO has been imposed, the share price has collapsed from over a pound to 43 p and sales growth has slowed significantly.

27:20 Why is this? What are the board doing to remedy this situation? So obviously, since I took over just under two years ago, we have moved from a market which has seen very substantial Scotch whisky growth over the past years into a period where all in that space have struggled. So during the last two years, our share price is down 40%. That compares to 39% for Brown Forman, 37% Diageo, 35% for Pernod. So across the whole space, everyone has seen challenges over that over that space. And while we slightly outperformed them in year to date share price, we are still well down as a result of that approach. And overall, the board remains fully supportive of the strategy to focus on delivering long term value shareholders through profitability and cash generation from the business. That's the path to meaningful returns.

28:14 The next one was what was the rationale for operating members the opportunity to buy a full cask? It says this idea is deeply flawed. It undermined the idea that the society tasting panel ensures we have the opportunity to share the very best curated whiskies. Selling a full cask was lazy and finance driven. It builds no way affinity with members will the strategy continue. So I would basically completely disagree with that. We spent a long time thinking about how do we bring an opportunity for members to buy a whole cask worth of whiskey, whole cask worth of bottles, selling well clear of any investment scheme or anything of that ilk, and I would say the response from members has been very good. What we have done is we've targeted two ends of that spectrum, one at the very high end, high net worth, and I think there's more opportunity there, where individuals are looking to spend £50,000 £200,000 on a private casket. It's something that society can bring a huge amount of additional story and experience to members in that space, but also at the other end actually finding a way to allow a much broader range of members to have their first ever opportunity to take part in ownership of a cast with the fiftieth anniversary programme and for the first time in our forty year history, last year we began selling the entire contents of a cask directly to our members.

29:33 Once bottled, that would form part of the fiftieth anniversary range in 2033 from an extended range. Now the original casks were handpicked by the tasting panel from a couple of celebrated distilleries and I'm delighted to say that feedback was very good. Almost a 100 people taking part in that. I'm really pleased to say that we are actually going to be releasing three more distilleries into that range in the coming weeks, including two Highlands and with very different styles as well as an peated Islay treat. So it gives members a front row seat to see be part of that whisky, see inside the cask as it matures over time and be be part of it. For an upfront price point of sort of $4.05, £6,000 at the start, similar levels again for duty and bottling. That's been really good and more to come on that space.

30:27 A question here about are the offers to shareholders as good as we had as shareholders of SNWS? Shareholder bottling is interesting, vouchers for venues have not used lately due to transport issues so of no value. Overall, I'd say we're always happy to hear suggestions, but overall shareholder benefits seem to be well received, So this is just to be clear that anyone who holds over about 1,100 shares sorry, a thousand shares and is a member of the Scottish Malt Whiskey Society can take part in the spirited shareholder member profile. I mean, certainly things like 50% off all renewals, very generous, has been well received, as well as some of the exclusive bottlings again going down well.

31:14 The next one was SM Dubs offering owning and bottling a barrel. I don't have 200 friends I would give a bottle to. So I'm not sure that's actually a question. I think it's just a comment. So that's all of the presses that were pre submitted. What I'll now do is I'll go through some of the ones that have been submitted while we're on the q and a. So the first one says, if the SPIRITS stock is worth over 100,000,000, yet our market cap is 30,000,000, why not sell a third of the SPIRITS stock for 30 and double the share price? This would be welcome as most of us have lost a lot of money in the last year here. So I think there's a couple of points here. So while I understand that people might be looking at a book value of the share price and disappointed at the share price as I am, You know, whiskey, like the investment, is not about short term return. It's about long term value, and that long term value comes from taking that SPIRITS STOP and turning it into bottles over the long term. That's where the long term value of this business comes from. Of course, in the short term, we're, of course, realizing some of the value from that inventory. We've been doing trade cast sales. We will continue to do so, continue to take advantage of that appreciation in the SPIRITS stop, but I don't think it's appropriate to sell at that kind of level but we might increase it a little from where we are if opportunities present themselves.

32:37 The second one says greetings from Greece and really nice to see Matt coming to you. This is reference to Matt Bailey who's currently our country manager in Australia who is gonna be coming across to The UK next month to become our European MD. He's been brilliant, nine years with the society, the most recent three years as country manager of Australia and brings a wealth of whiskey and SMWS knowledge to The UK. So he said in the last four to six months, we do monitor a price rationalization. We have bottles at the range of €60 to €70 and we also see better spirit quality and taste. Are you going to further rationalize prices and increase the offering at the range of €60 to €80 etcetera. So pleased to see that the focus on making sure that there's a broader range of really good quality spirits at that lower price point is available.

33:29 Certainly, as I said earlier, the kind of 50 to £100 price point, particularly that, you know, corresponding to this 60 to €100 range is an area where we are continuing to make sure there is more and more liquid available in that range because it's a space that consumer demand is is relatively high. So yes, that is an area we will continue to make sure there are plenty releases in that space. Next one, how do you accelerate the transition of value from a 100,000,000 to the 500,000,000? Is there an additional strategy you could deploy? Mean, certainly, think that the acquisition of Single Cask Nation allows us to accelerate that growth in SMWS and new markets as a way of accelerating that and looking at cask sales and private cask sales are all ways that I think we can seek to accelerate.

34:19 We also continue to look at other ways to realize value from that inventory. The next one is how are your brokers helping to find new shareholders? Of course, we're always looking to speak to new parties. The challenge at the moment is if you're fishing in the the normal pond of small cap aim fund managers, they have all seen substantial outflows over recent years and they're starting to see some inflows, so what we have managed to be successful at is approaching people with other investment angles, IHT, private client brokers, other private investors to try to get additional investment. Most successful to date though has been additional member investments. Next one up, why have you not saved what you've paid for single cast nation is the deferred consideration in shares or cash?

35:14 Included in the detail of the notes and accounts is the detail that's all in there. It was a few $100,000 upfront and plus an earn out which is up to $500,000, primarily paid in cash though that those funds were largely covered through both the combination of the original assets on acquisition and the piece in the air net. What I would say more importantly is the team have been a brilliant addition. Single Cache Nation has been a great addition to the to the to ASC delivering well, really well received, members their consumers and customers continue to really appreciate the quality and standing of the of the liquid. Last few here, possibly answered, but how many members are also shareholders?

36:05 From memory, it's around about 1,500. I can't remember the exact number. It was certainly around about 10% of members on IPO also invested 10% of members at the time of the IPO bought over a thousand pounds worth of shares after the IPO. I think it's slightly higher now, roughly a thousand to 1,500. So that's it for all of the q and a submitted. Thank you very much all for taking the time, for continuing to be supportive of the business and of the shares, and I look forward to speaking to you again in due course. In the meantime, will continue to focus on delivering profit, delivering cash and delivering outstanding whiskeys. Thank you very much all. Thank you. Fantastic.

36:52 Thank you very much indeed for your presentation and answering all those questions you can from investors. Of course, any further questions you've submitted, the team will be able to review those and publish responses where appropriate to do so on the Investor Me company platform. Thank you for updating investors today. And could I please ask investors not to close the session? It should be now automatically redirected to provide your feedback in order the team can better understand your views and expectations. This will only take a few minutes to complete, and it is greatly valued by the company. On behalf of the team at ARTISANAL SPIRITS COMPANY PLC, I'd like to thank you for attending today's presentation. That concludes today's session, and good afternoon to you all. Thank you.